A de-linked subordinated class sold last week by retailer Saks Inc. may be an example of paper that offers issuers a simpler, less expensive alternative to the highly touted "block and trap" master-note trust programs used by Citibank and most recently MBNA, sources said.

While the main benefit of Citibank"s "block & trap" and the new "MBNAseries" program are in the flexibility offered to large frequent issuers, Saks successfully conquered the most difficult challenge of securitization for a smaller off-the-run issuer - the placement of the triple-B rated paper.

Last Wednesday, Saks sold $65.3 million of series 2001-2 credit card-backed paper via the lead of Banc of America Securities, pricing at par with a coupon of one-month Libor plus 150 basis points.

"Saks solved the classic challenge facing private label credit card issues - finding investors who can get comfortable with the collateral in the lower-rated tranches - without having that hold up the sale of the largest piece of the deal, the seniors," said research analyst Jeff Salmon of Barclays Capital.

Banc of America Securities banker Luis Araneda concurs comparing the sale of the triple-B rated class of a credit card deal to the proverbial tail wagging the dog'. "Triple-Bs take more work to sell. Sometimes you have the triple- and single-A's quickly sold and you still have to place the triple-B's," Araneda said.

Now, following the placement of the all-important C class, Saks can tap the market for up to $500 million of triple- and single-A rated paper opportunistically which is the most important aspect of de-linking a deal.

The irony in all of this is that after spending a considerable amount of time and money setting up these innovative issuance programs, according to Araneda, many credit card master trusts already allow the issuer to de-link senior and subordinated classes. While Araneda admits that there are benefits for mega-issuers such as Citibank and MBNA, which sell over $10 billion of supply per year, "For a less frequent issuer like Saks it doesn't make sense to go through the expense diligence of setting up a new trust," Araneda added.

As for this process being utilized by comparable issuers, Barclay's Salmon thinks that it is likely that some retail credit card issuers, which tap the market much less frequently, will take notice. "This is the right approach for these companies - you get the flexibility of the structure without the process others had to go through," said Salmon.

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